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Domestic rebar output at 137 long steelmakers across China regularly canvassed by Mysteel reached 2.92 million tonnes as of February 13, down by just 10,600 tonnes or 0.3% week on week though still the lowest since March 2018, according to Mysteel’s latest weekly production study. The total was also 57,400 tonnes or 2% down from that in the last surveyed period before the Chinese New Year holidays.
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Prices of
hot-rolled coil across China reversed down last week as the domestic market
remained in holiday mode after the Chinese New Year break, according to market
watchers last Friday.
China’s national
average benchmark price for Q235B 3mm HRC slipped by Yuan 23/tonne ($3.4/t)
from February 11 to reach Yuan 3,875/t including the 16% VAT as
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Rebar futures prices on the Shanghai Futures Exchange headed down over the first week after Chinese New Year holiday. As of February 15, the most traded rebar contract – that for May delivery – had lost Yuan 155/tonne ($22.9/t) compared with the closing price on February 1, the last trading day before the holiday, to end the daytime session Friday at Yuan 3,599/t.
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Rebar inventories held by Chinese mills and traders increased markedly over the long Chinese New Year holiday break, chiefly because mills kept producing but customers weren’t around to buy. Interestingly though, the pace of stocks accumulation was slower than during Chinese New Year last year.
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Over January 28-February 1, iron ore futures on the Dalian Commodity Exchange (DCE) posted forceful jumps in reaction to the market concern on iron ore supply reduction with Vale’s tailings dam collapse on January 25, which also sent strong support to the steel futures prices on the Shanghai Futures Exchange (SHFE), though the latter’s price strengthening was milder in comparison.
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Stocks of the five major finished steel items among Chinese steel traders in 35 major cities continued to swell for a sixth straight week over January 24-30 to reach an eight-month high of 11.2 million tonnes as of January 30, according to Mysteel’s latest survey. This also represented a climb of 1.3 million tonnes or 12.6% week on week.
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China’s domestic rebar output dropped for a second straight week during January 17-23, declining by a large 5.2% or 165,900 tonnes on week to 3.05 million tonnes, according to Mysteel’s weekly production study of 137 integrated long steel producers.
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Chinese domestic prices of hot-rolled coil increased last week even though buying interest has waned with the approach of the Chinese New Year holidays. Prices rose because stocks in hand among traders and steelmakers have decreased, leading sell-side sentiment to firm, respondents to Mysteel’s weekly survey explained.
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Mysteel’s latest survey of steel stocks held by traders in China’s 35 major cities showed that their inventories of the five major carbon-steel products increased by another 673,600 tonnes or 7.3% on week to 9.9 million tonnes as of January 23, though the total was still 6% lower on year. Traders continued to stock up during the week to January 25, and by Friday most had already completed procuring what they need before the start of the Chinese New Year holidays, respondents said.
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Rebar futures prices on the Shanghai Futures Exchange continued firming during the January 21-25 week as investors are still encouraged by pre-holiday good news. The exchange’s most traded rebar contract – that for May delivery – ended the daytime session on January 25 at Yuan 3,710/t ($548.9/t), which was higher by Yuan 77/tonne on week and by Yuan 306/t over successive weeks of increases.
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Chinese long steel producers throttled back their rebar production again last week by idling more blast furnaces or rolling lines for maintenance with the Chinese New Year holidays imminent. As a result, rebar output declined by 2.7% or 88,100 tonnes on week during the January 10-16 week to 3.2 million tonnes, according to Mysteel’s latest weekly production survey of 137 integrated long steelmakers.
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China’s national average benchmark price for Q235B 3mm hot-rolled coil slipped by Yuan 9/tonne ($1.3/t) on week to Yuan 3,796/t including the 16% VAT as of January 18, Mysteel’s latest weekly survey showed. Market participants see the poor trading activity for coils amid the cooling of demand and are growing cautious, survey respondents said.
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Steel stocks at traders in 35 Chinese cities increased by a further 407,200 tonnes or 4.6% on week to 9.25 million tonnes as of January 16, as steel traders are being tempted to store up steel products, Mysteel’s latest inventory survey showed on January 18.
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China’s 137 long steelmakers recovered their rebar production by 1.1% or 35,100 tonnes week on week to 3.3 million tonnes over January 3-9 amid the declines in their stocks, according to Mysteel’s weekly production study among these mills.
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China’s flat steelmakers cranked up production during the January 3-9 week as the market sentiment was improved by central government support for lifting consumption in key downstream areas for steel.
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Inventories of the five major carbon-steel products held among Chinese traders in the 35 major cities Mysteel regularly tracks were higher by another 460,000 tonnes or 5.4% on week at 8.85 million tonnes as of January 9. Total stocks have now been increasing for three successive weeks, Mysteel notes.
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Last Friday’s announcement from the People’s Bank of China (PBOC) that is intends to cut the reserve ratio required of commercial banks prompted rebar futures prices on the Shanghai Futures Exchange to rise further this week, market sources said. However, rebar prices in the physical market failed to share the paper market’s enthusiasm, they observed.
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Five major steel products
inventories at mills Unit: ‘000 tonnes
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China’s national average benchmark price for Q235B 3mm hot rolled coil dropped by Yuan 27/tonne ($3.9/t) week on week to Yuan 3,794/t including 16% VAT as of January 4, Mysteel’s database showed. Among the regions, the spread between prices in China’s two key steel-trading hubs – East China’s Shanghai and South China’s Guangzhou – has stretched to over Yuan 200/t since December 27, a trend that is being sustained because the Guangzhou market is showing firm fundamentals, according to market watchers.
